​Which One of the Following Allocations Is Most Likely to Meet

question 88

Multiple Choice

​Which one of the following allocations is most likely to meet the "substantial" test in the "substantial economic effect" rules? (Assume all the "economic effect" tests are met.)

• A)​The ROY LLC specially allocates $20,000 of income each year to partner Red with no offsetting loss allocations in other years.
• B)​The YGB LLC specially allocates $30,000 of ordinary income this year to partner Green with an offsetting allocation of loss in that same amount next year.
• C)​The BPV LLC specially allocates $10,000 of capital gains to Violet and $10,000 of interest income to Purple because Purple is in a lower tax bracket.
• D)​The PIR LLC specially allocates $60,000 of income to Indigo with no offsetting allocations. Indigo has expiring net operating losses.

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Definitions:

Marx

Karl Marx, a 19th-century philosopher, economist, and revolutionary, known for his theories about capitalism and communism.

Demographic Transition Theory

A theory that describes the transition from high birth and death rates to lower birth and death rates as a country develops from a pre-industrial to an industrialized economic system.

Population Development

The study of changes in population numbers, composition, and distribution, and how these changes affect socio-economic development.

Crude Birth Rate

The number of live births per 1,000 population in a given year.